Extend minimum wage to cover self-employed, says think tank

Minimum wage legislation should be extended to cover self-employed workers who do not control their own rate of pay, according to a think tank.

The Resolution Foundation claims that of the 4.8 million people defined as self-employed, around half earn below the low pay earnings threshold of £310 a week.

The group argues that the government needs to do more to protect certain groups of self-employed workers, such as those operating in the so-called ‘gig economy’, as they do not have the opportunity to set their own wages.

If enacted, the change could also bring greater protection to those operating in more traditional sectors such as hairdressers and minicab drivers.

It proposes that companies who set the rate of pay for independent contractors would be required to calculate whether a person working at an ‘average’ pace would be able to earn at least the minimum wage after expenses.

The body has submitted its recommendations to Matthew Taylor, who is leading a government review into modern UK work practices.

Conor D’Arcy, a policy analyst at the Resolution Foundation, said: ‘By extending minimum wage protections to those self-employed people whose prices are set by a firm … self-employed people in the gig economy would be given protection against extreme low pay for the first time ever.’

However, Seamus Nevin, head of employment and skills policy at the Institute of Directors, warned that an ‘obligatory minimum wage would undermine the business model of many gig platforms … who would find it hard to justify paying people at times when there was no demand’.